Who is eligible?If you are a kindergarten through twelfth grade teacher, instructor, counselor, principal, or aide who was employed for at least 900 hours during 2002 and paid qualifying out-of-pocket expenses during the 2002 tax year, you are eligible to exercise the new deduction. If you meet the criteria, you may take this deduction even if you do not itemize. The deduction is entered using Form 1040 (line 23) or Form 1040A (line 16).

How much can I deduct?

Eligible educators filing individual or joint returns may deduct up to $250 in qualifying expenses. If you and your spouse are filing jointly and both of you were eligible educators in 2002, the maximum deduction is $500. However, neither spouse may deduct more than $250.

Which expenses qualify as deductible?

Qualifying expenses include ordinary and necessary expenses paid in connection with books, supplies, equipment (including computer equipment, software, and services), and other materials used in the classroom. An ordinary expense is one that is common and accepted in your educational field. A necessary expense is one that is helpful and appropriate for your profession as an educator. An expense does not have to be required to be considered necessary.

Some expenses that do not qualify...

Qualifying expenses do not include expenses for home schooling or for nonathletic supplies for courses in health or physical education.

You must reduce your qualifying expenses by the following amounts:

• Excludable U.S. series EE and I savings bond interest from Form 8815

• Nontaxable qualified state tuition program earnings

• Nontaxable earnings from Coverdell education savings accounts

• Any reimbursements you received for these expenses that were not reported to you in box 1 of your Form W-2